What is a good savings account interest rate?
The Federal Deposit Insurance Corporation, or FDIC, notes that the average interest rate for savings deposit accounts is 0.37%. Anything above that is probably a decent rate, but the best high-yield savings accounts can return 3% or more.
Why savings account interest rates matter
The higher your savings account interest rate, the more your money earns in the bank.
Let’s consider a hypothetical example so you can see how much difference a few interest points make. Imagine you put $5,000 in a savings account. You add $100 to that account every month for five years, and you never take any money out of it.
The table below breaks down how much you end up with given various interest rates.
| Interest Rate |
Starting Deposit |
Total Monthly Contributions |
Interest Earned |
Total Balance after 5 Years |
| 0.37% |
$5,000 |
$6,000 |
$148 |
$11,148 |
| 0.75% |
$5,000 |
$6,000 |
$302 |
$11,302 |
| 1.5% |
$5,000 |
$6,000 |
$611 |
$11,611 |
| 3% |
$5,000 |
$6,000 |
$1,254 |
$12,254 |
How often do savings account interest rates change?
Interest rates on traditional savings accounts don’t tend to change that often. If you open a regular savings account, your interest rate, which might be as low as 0.1%, may stay the same the entire time you have the account.
However, if you open a high-yield savings account, your rate may be variable. This may be the case on other types of accounts; always check the fine print to see what type of rate you have.
Variable interest rates can change at any time, but they most often change when the Federal Reserve adjusts rates.
Get to know some of the following high-yield savings accounts:
*Limit of 6 withdrawals per statement cycle
What to look for when choosing a savings account
When shopping around for savings accounts, finding one that works for you with the best savings rates possible is ideal.
Here are some things to consider:
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Initial deposit requirements: How much money do you need to open a savings account? You can open some accounts with just $50, for example, but the best high-yield accounts may require much more as a deposit.
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Minimum balance requirements: Some savings accounts require that you keep a minimum balance to get the best interest rates or avoid fees.
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Any fees: Read all the fine print about a savings account before you open one so that you know whether you will have to pay maintenance fees, low balance fees, ATM fees, or other fees that could eat into your savings.
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Accessibility: You can open accounts with online banks that don’t have any branch locations and make deposits and withdrawals digitally. Some people like this, while others want a local branch so they can speak to someone face-to-face about account matters and easily deposit cash. Think about what you prefer before selecting an account for yourself.
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Connection options: Can you connect the savings account to your checking account or other accounts? This can make it easy to transfer money to and from your savings, which may be a pro or con, depending on your personal finance habits.
What is a savings account?
A savings account is a bank account used to keep money you deposit with the aim of saving. It earns some interest, though how much you earn depends on the type of savings account you have.
While you have access to the money in your savings account, you can’t use it in the same way you use money in a checking account. With a checking account, you can write checks and use the account debit card to pay at stores or online. If you have a debit card for your savings account, you may only be able to use it to withdraw money at the ATM. You also can’t write checks against a traditional savings account.
Depending on your savings account, there may be limitations on how you can access your money. For example, you may only be able to make so many withdrawals or transfers each month before you’re charged for them.
Who should get a savings account?
Savings accounts can be beneficial for people of all ages, income levels and personal finance habits. They provide a safe place to save money while keeping it accessible for emergencies and other needs.
Types of savings accounts
Not all savings accounts are the same. Here’s a quick rundown of the basic types of savings accounts you might consider:
Traditional savings accounts
Traditional savings accounts tend to be the most common product people mean when they talk about savings accounts. These are low-yield accounts (meaning they tend to have low interest rates). You can often sign up to a traditional savings account for free, particularly if you have a checking account with the same financial institution.
Traditional savings accounts are a good choice if you want to safely save relatively small amounts of money — say $1,000 or $3,000 — as a rainy day fund which you will be able to access easily when you need it.
Best traditional savings accounts:
High-yield savings accounts
High-yield savings accounts have much higher interest rates than traditional savings accounts. Because they cost the bank more to operate, they often require a minimum initial deposit and balance requirements.
These types of accounts may be a good fit if you have $5,000 or more to save and know you can keep the minimum average balance in the account. Bear in mind that this type of account often has a fixed term and you will be limited in your ability to withdraw from it. It is important to understand the pros and cons of high-yield savings accounts to help you decide if it is right for you.
What bank currently has the highest savings interest rate?
Best high-yield savings accounts:
Although no banks currently offer a 7% interest rate on savings accounts as of April 2024, you can explore further details about this in our guide to 7% interest savings accounts.
Money market accounts
Money market accounts offer higher yields than traditional savings accounts and often include checking-account-style privileges, such as debit cards and the ability to write checks drawn from the account. They aren’t the same thing as checking accounts, however, and tend to have more limitations. For example, you may only be able to write a certain number of checks in a given period.
Cash management accounts
Cash management accounts offer similar services as savings and checking accounts, but a cash management account is not a banking product. They’re offered by brokerages which handle your cash deposits for you. In some cases, brokerages might split up large cash deposit amounts into various banking accounts so that your funds are secured by FDIC insurance.
Specialty savings accounts
Specialty savings accounts are designed to help account holders with specific financial goals.
A few examples of specialty savings accounts include:
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Kids’ savings accounts: These are accounts parents or guardians can open for minors who want to learn to save money. They typically don’t have minimum deposit, balance requirements or fees, though some banks require the parent to have an account with the bank.
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College funds: These types of accounts are designed to help parents and children save for future college expenses.
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Health savings accounts: If you have access to this type of account, such as through your employer, you can contribute pretax dollars that can be used later in the year to cover medical expenses.
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Retirement savings accounts: These accounts let you contribute pretax dollars to save for retirement.
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Christmas savings accounts: Some banks offer special savings programs that let you put away a little each month, so you have cash on hand for the holidays.
How to apply for a savings account
You can apply for a savings account in person at a bank or credit union or online with a financial institution that offers online savings accounts.
What you need before you apply
The exact requirements may be different depending on the policies of the bank or credit union you choose.
You’ll commonly need the following to apply for a savings account:
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A government-issued ID: This could be a driver’s license, another ID issued by your state, or a passport.
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Your Social Security Number or Tax Identification Number: Most banks require this information to verify your ID.
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Proof of address: Some banks may require additional proof of address other than your ID. You might use a lease agreement, mortgage statement, or a utility bill in your name.
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An initial deposit: You can usually make an initial deposit with cash or a check, via a credit or debit card from another account, or via an ACH transfer with the routing and account number from another account.
Steps for applying
Follow these steps to apply for a savings account:
- Choose the financial institution you want to work with.
- Decide whether you want to apply online or in person.
- Gather all the documents required.
- Review savings account products and choose the one that’s right for you.
- Complete the application. You can do this by yourself online or with the help of a banking representative in a branch.
- Deposit money into your savings account.
Are there fees associated with savings accounts?
Whether you pay fees depends on the type of account you open and the policy of the bank, credit union, or other financial institution.
When you review savings account options, look at fee structures and ask questions if you aren’t sure what fees you might have to pay.
Some common fee types associated with savings accounts include:
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Maintenance fees: These are fees charged to cover the cost of maintaining your account. You may pay them monthly, quarterly, or annually. If you have a free savings account, you won’t pay these fees, though you may have to keep a minimum balance to qualify for this perk.
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ATM fees: If you have a card associated with your savings account and use it at non-branch or out-of-network ATMs, you may have to pay a fee.
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Paper statement fees: Some banks charge a fee for sending paper statements. You can generally avoid these costs by getting electronic statements only.
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Inactivity fees: If you open an account and just let it sit there, you could be charged an inactivity fee.
Benefits of opening a savings account
Savings accounts are considered a safe way to put cash away. They’re extremely low risk, which means you can be confident your money will be there when you need it.
Even if the bank fails, a savings account with a balance of less than $250,000 is FDIC-insured, so you won’t lose your money.
Other benefits of savings accounts include:
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Easy access: Savings accounts are liquid assets. You can have almost instant access to your funds when you need them, making them a good way to fund emergency expenses.
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Almost anyone can open one: You can find a savings account that’s right for you, no matter how little your initial deposit is.
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You’re not locked in: In most cases, you can close a savings account and move your money somewhere else whenever you want.
Drawbacks or limitations
Because savings accounts are low-risk, they don’t offer high returns compared to some other investment options. Even high-yield accounts offer relatively low returns compared to other money management options.
Other drawbacks of savings accounts can include the following:
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Minimum balance requirements: In cases where you have a minimum balance requirement, you may not feel you can use all your liquid assets if you need them.
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Withdrawal limits: You may only be able to withdraw from your account up to six times a month without paying a fee.
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May not keep up with inflation: If inflation is high, your money probably won’t earn enough in most savings accounts to keep up with the inflation rate.
Alternatives to savings accounts
If you want to save money but aren’t sure a savings account is right for you, explore some alternatives.
Some other options include:
